USPTO Budget Cuts Halt Track I & Other USPTO Initiatives

On April 22, 2011, USPTO Director Kappos announced the impact of the budget reductions embodied in the fiscal year 2011 budget that finally was enacted on April 15, 2011. (Fiscal year 2011 runs through September 30, 2011). The budget gives the USPTO the authority to spend only $2.09 billion, which is about $100 million less than its projected fee collections.

Track I Stopped Before It Started

Facing the reality of not being able to spend any of the $4000 per application fee it would have collected, the USPTO has decided not to implement fee-based prioritized examination (Track I), which was going to be available as of May 4, 2011.

Applicants interested in prioritized examination should consider whether their applications qualify for other programs, such as the Accelerated Examination, Patent Prosecution Highway, or Green Technology programs. An overview of these programs can be found in this article.

Director Kappos clarified that the budget and operations for Trademarks are “unaffected.”

Devastating Impact?

The popular press if full of stories about the devastating impact the fiscal year 2011 budget will have on social programs funded or supported by the federal government. While patent issues may not rise to that level of urgency, the impact of these budget restrictions should not be given short shrift, particularly when we keep in mind that the USPTO is funded by applicant fees, not taxes. In slashing the USPTO’s spending authority, Congress is siphoning off $100 million in fees that applicants pay to the USPTO, essentially robbing Peter to pay Paul.

The above list of cut-backs drives home the impact that these budget restrictions will have on examiner morale and examiner retention (with the elimination of overtime), examination quality (with the reduction of training), and the application backlog and prosecution delays (with the hiring freeze). USPTO operations have suffered the affects of fee diversion for years, but the current spending reductions come at a critical time for the USPTO, and are going to undermine its ongoing efforts to effect real improvements.

The current patent reform legislation pending in the U.S. House of Representatives effectively would put an end to fee diversion. The House Judiciary Committee voted in favor of the House bill (H.R. 1249) on April 14, 2011, and it may be up for a full vote when Congress returns in May. If this law becomes a reality, the USPTO will be in a better position to carry out much needed improvements which will help it meet its strategic objectives and strengthen the U.S. patent system.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney.
This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary.
The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites.
In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

It’s utterly shameful that the patent office has had to suspend implementation of the Track One program. The initiative could go far to increase much-needed revenue for the woefully-underfunded agency, bite into its crushing backlog, help innovators get their inventions to market, and, as a result, reduce U.S. unemployment. And now that rumors predict the death of yet another patent reform bill, it looks like USPTO staff will have to go back to the drawing board in finding sufficient revenue to operate properly. What a disgrace.